In an Era of Accelerating Attention to Workplace Equity: What Place for Bangladesh?

(BGF) – Rana plaza collapse in April 2013 waved a wake up call for improving the working conditions in Bangladesh. to the issue in the year of 2013. Mr. Arnold Zack provided BGF his views on dealing with the issue, to which the Boston Global Forum has organized several conferences to seek for solutions.

In an Era of Accelerating Attention to Workplace Equity: What Place for Bangladesh?

Reflections on the Bangladesh Development Conference 2014 at Harvard University

By Arnold M. Zack, Senior Research Associate, Labor and Worklife Program at Harvard Law School

When Mohammed I. Yousuf asked me to participate in the June 14, 2014 conference on Globalization and Sustainability of the Bangladesh Garment Industry, I doubted whether my experience in mediation and in designing labor dispute resolution systems would have much applicability in that country and that industry. But a review of the history of worker and public concern for worker conditions in developing countries shows a trail that leads us to what’s now happening in Bangladesh.

In the 1970s and 1980s when European and American Brands began sending abroad for assembly of garments, there was a protest over the loss of the jobs at home where our workers had previously made those clothes. Then, when it became apparent that those garments were being made in countries where wage rates were but a fraction of what textile and garment workers were paid in North America and Europe a new round of protests against the brands arose over the unfair conditions under which those garments were made. When the universal practice of contracting out that work to factories owned, not by the brands but by others who in turn subcontracted their work to even smaller factories, the public outcry shifted from the brands to the countries that enabled factories to engage in such unfair practices. Brands were uniform in proclaiming their endorsement of fair labor standards in widely publicized Codes of Conduct, while shifting the onus onto the presumably unscrupulous factory owners(with whom the contracted for garments), and by asserting they did their best to routinely monitor the situation to uncover and prevent worker exploitation.

During that period, I accepted the bona fides of the brand assertions although I should have realized that self monitoring such as was done by GAP, Disney and other mega manufacturers, could uncover or prevent little when their few monitors had responsibility for monitoring more than 5,000, 10,000 or in the case of Disney 15,000 factories making their logo products in more than 50 different countries. My doubts were intensified when the brands hired outside, self-proclaimed neutral monitoring outfits, which they paid to do the monitoring. Although that appeared to ensure more thorough and objective monitoring, I was and continue to be puzzled over how such a monitoring organization, dependent on the brand for its work and its funding could reasonably be expected to critically report back to its “employer” that the latter was in violation of ILO conventions 87 and 98 by failing to allow the employees of the factories it used, to exercise their right of freedom of association or their right to engage in collective bargaining. In China, where so many subcontracting factories make so much of what we consume, and where there is only one legal government controlled and employer funded labor union, the All Chinese Federation of Trade Unions, it is difficult to see how so many brands can be given plaudits for their upholding the Core ILO conventions while worker exploitation continues and rank and file workers are jailed for protesting unfair conditions.

This evolution of scrutiny of overseas working conditions is quite relevant to where we presently find the Bangladeshi garment industry. Brands continue to farm out their work to local factories throughout the developing world, and primarily in southeast Asia. The brands set fixed prices for the local factories to manufacture and deliver their finished garments, the factories are able to enhance their profit most easily by cutting into the entitled earnings

of their workers by failing to pay them on time, by imposing mandatory overtime at straight time wage rates, by restricting their time for toilet breaks and healthcare necessities, and yes, by putting too many workers into factory buildings that can not bear the weight, or by renting factory buildings the owners of which shave costs by shoddy construction and by evading building and safety code requirements for exits and stairways. One would think that local governments would police these factories to assure compliance with national law. Too often the laws are weak and the government officials so underpaid that bribes and corruption are more often the rule than the exception.

Unfortunately there is no international law that mandates fair workplace conditions. The International Labor Organization, a specialized agency of the United Nations, has since 1919 proclaimed as international norms a series of Conventions to which worker, employer and government groups from its member states have agreed to be fair, such as a work week of 40 hours with overtime paid for hours worked above that nor. When national governments ratify those Conventions, they become national law and many of the Southeast Asian countries have ratified most protective conventions. But not all national governments exercise the same measure of diligence in policing factories for violations and furthermore in many countries where violations are found, the integrity of the players does not prevent bribes and favors to protect the violating factory owners as they continue without apology their exploitative practices

The focus of consumer and NGO protest over these exploitative conditions has been on those developing countries where the media report the most newsworthy awful conditions; the mass tragedies at coal mines, in baby formula milk and living and working in toxic neighborhoods and factories and the suicides at Foxconn in China have all captured consumer attention, and raised red flags at the brands which are fearful of the adverse impact such reports have on their sales.

In China at least, these worker protests although occurring without the approval of the ACFTU, have led to substantial increases in wages and the factories owners there, Chinese, Taiwanese and Korean, look elsewhere for places where they can continue to produce for the brands with less scrutiny, with less governmental pressure and with assurances of slightly greater profit than they can earn in countries where workplace conditions are under ongoing scrutiny.

Increasingly those factory owners have migrated to Bangladesh. With the lowest wages in South East Asia the prospects for profit from factories were indeed greater than in those neighboring countries where monitoring was more effective, government scrutiny of building safety stronger, and where wages had begun to climb.

The enhanced profits that were attainable in Bangladesh proceeded largely under the do-gooders radar until the fires, and building collapse and the sudden glare of media scrutiny placed the Bangladesh garment industry under the microscope, and from my perspective spread concern from the narrow issue of factory safety to the broader issue of awareness of the deplorable working conditions of garment factory workers, and in turn, I guess, became the driving force for the Saturday seminar.

There were at that crowded session, open and frank expressions from the wide gamut of players in the current scene. Many of the declarations in the fast moving exchanges were self-serving. Brands and others management types shifted responsibility elsewhere for conditions that prudent investment and management required their knowledge of. Others proclaimed that the rapid rise of wages over the past few years has exacted too heavy a toll on the factory owners to justify their paying any more for the present while the international agency and NGO representatives proclaimed these events were essential as a wake up call to the business community to pick up more of the burden, indeed to picking up their fair share to enhance the living conditions of Bangladeshi workers to ensure the long term prosperity of the country.

I too, see this as a wake up call, but one that will improve conditions and contribute to prosperity for a larger community, the workers in factories in Bangladesh and among its neighbors.

Those ILO Conventions are not merely government hand-outs making their sponsors and agreeing governments feel relieved that they are meaningful partners in the international labor community. They are protections for those workplace partners who haven’t the clout to demand and achieve them on their own. When, perchance workers try to do so, through efforts to create unions or strike for better pay or to seek employer conformity with contribution requirements to government pension schemes, they are fired, they are arrested and they are penalized for trying to achieve what the world body, the ILO has held out as world wide norms. Not the best in the world, but indeed the minima that even governments and employer groups agree is the worker entitlement. Conformity to those norms cost employers money and squeeze the profit margins of the factories which know that a demand to the brands for higher payments will mean the loss of that and other orders to other countries. Those countries have factory owners who don’t feel such pressure from government and worker groups and can thus make acceptable profits under unwavering prices paid by the brands. It is indeed difficult, if not unreasonable for NGOs and others to expect the factory owners to voluntarily match ILO standards, or even national legal requirements if the cost of such compliance will drive them from business and eradicate the jobs of those they employed. It is also a fools errand to expect the brands to insist on factory compliance with national laws when it is clear that they can readily move their orders to factories in a neighboring country where the brand can continue to proclaim the importance of adherence to its code of conduct when it knows its hired gun monitor, or its self monitoring or even a gift to a overly curious government inspector, will exonerate it from any wrongdoing within the factory making its garments.

Until the Rana Plaza collapse, Bangladesh was in many cases the beneficiary of efforts elsewhere at code compliance and ILO convention adherence. The brands readily moved their orders to factories in Bangladesh where wages were lower than elsewhere in Southeast Asia, and where there was much less risk of government officials and very low paid labor officers coming after them as is the case in less corrupt countries. Given that background it was natural that the participants at the Harvard Seminar would try either to keep the clock from advancing by pointing out how much wages had risen in recent years while trying to protect status quo on worker protections. Despite the horrors of the fire that were so directly traceable to under code construction and disregard for safety of garment workers, many of those who found themselves pressured into paying restitution turned to the least objectionable and least costly program to get the whole mess behind them. The American companies, which were the supporters of the Alliance, unlike the mostly European companies endorsing the Accord, even sought to limit their liability through a fixed sum maximum total liability.

I viewed the conference as an exciting opportunity to meet and hear those who truly are the movers and shakers in the garment industry in Bangladesh, and if not Bangladesh based, are from the even more powerful institutions that seek to shape a positive future for Bangladesh in this most crucial area. How to do this?

In my view the brands do exercise a positive role in pressuring the factories to improve safety and workplace conditions to meet ILO and national statutory standards. Prior to Bangladesh coming under international scrutiny the brands have had the assurance of being able to move their orders to a lower cost countries such as Bangladesh, when there has been less blowback from disgruntled factory owners who bristle at accepting what the brands offer to pay. The factory mangers act have acted reasonably in their self-interest by trying to maximize their profit, even if off the backs of their employees when the brands routinely reject their pleas for higher payment. The workers of course, when they seek to assert their self interest in asking for more, even when it means having the factory live up to its statutory requirements, routinely expect to be suppressed, if not punished for seeking to speak up and are stuck as the dubious beneficiaries of continued work at factories opting to continue in business rather than pulling up stakes from their leased equipment to move themselves to neighboring countries with less commitment to providing fair workplace condition. The bottom line is that the country of Bangladesh and its factory owners benefit from brands moving their orders to its factories. It could be argued that the workers too benefit from the fact that they at least have jobs which they would not, had the brands continued to send their orders to factories in other countries. This downward spiral might well continue as brands seek ever-lower paying countries to which to move their orders. Beyond South East Asia, it seems feasible that they could move orders to Africa and elsewhere where wages are low, governments are cooperative and factory owners are present or are quick to arrive. But geography argues for that work remaining in South East Asia where all the competing countries border the water over which all of this merchandise is shipped by freighter. Thus it could be argued, that Bangladesh is indeed the last stop for the bargain hunting brands.

My position is clear, as I noted at the seminar. Workers have a reasonable expectation in seeking to work under conditions the world has in effect promulgated in the ILO conventions particularly the Fundamental Eight to protect against forced and child labor, to assurance of work in an equitable and non discriminatory workplace and to be free to exercise their right to organize and to bargain collectively. Factory owners have a right to maximize their profits but not by exploiting their workers or violating local protective laws. Brands have a right to achieve the highest profit in contracting garment production to local factories, but they too have a moral obligation, or good business sense to assure that the garments they sell are made under reasonable fair labor standards such as delineated by the ILO conventions. Regardless of whether their hired monitors announce their violation of laws or norms or code declarations, it is their responsibility to assure that the factories making their garments do so under fair conditions free of worker exploitation.

So is there a way out of this profit-chasing circle? I think there is and I further think that Bangladesh is the lynch pin that can bring an end to the bottom feeding shopping the brands practice. If the government of Bangladesh were to take the position that it expects factory owners within the country to adhere to ILO standards and joined in prohibiting workplace exploitation I believe that would bring an effective end to the brands threatening to take work from factories in one country to move them to a factory elsewhere where the factory owner can get away with the worker exploitation. If all factories in Southeast Asian countries were to take the same position that they are complying with Code requirements by paying more in wages, in worker benefits and protections, it might indeed force the brands to pay the factory managers more when there is no lesser paying country to which it could move its orders.

What, you ask, is that fair standard to which factory managers and owners can be expected to operate; what is that level playing field? What has happened in Cambodia provides the promising answer. In 2002 the Cambodian government under the multi-fiber agreement, as a condition of securing a larger import quota into the US, agreed to having the ILO come into the country to monitor its garment factories. Instead of its factories having to spruce up for periodic inspections from every one of the brands for which it was producing garments (often a dozen or more), the ILO undertook the monitoring function, periodically making unannounced visits asking 500 questions of factories and their employees to assure workplace fairness. The government agreed to allow workers to organize and engage in collective bargaining, and to the creation of the Arbitration Council, an independent body of local lawyers selected by the parties serving as arbitrators to resolve questions of violation of collective agreements or law. It was expected that on December 31, 2004, the expiration date of the multi-fibre agreement, that the 250 factories employing some 250,000 garment workers would close. They didn’t. Instead they expanded. Today there are some 350 factories employing some 700,000 employees, and factories from other countries including China with its higher wages are moving to Cambodia subjecting themselves to ILO inspections and oversight as preferable to the conditions under which they operated before where cronyism and corruption often permitted greater profits and a continued supply of work orders from the brands. It has not all been clear sailing. Cambodia has had its problems, there has been a rash of now-legal strikes and conflict among trade unions and regional associations competing to represent workers. But structures are in place to help cope with them.

If all the Southeast Asian countries banded together to provide employment in compliance with ILO standards or under enforced national laws their factories would have a stronger defense against the country shopping engaged in by the brands. The brands would have to reconsider the strictness of their pricing in letting out contracts to the factories even though that might result in raising their prices. But since all their competitors would be making their garments in the same factories under the same constraints, that competitive disadvantage would be dissipated. And the evidence shows that consumers in Europe and the US are willing to pay somewhat more for garments made under fair working conditions.

I offer no guarantees that this proposal will fully resolve the problem of workplace fairness, will prevent the race to the bottom, or will even ensure that Bangladesh will retain and expand its garment trade. But I offer it as a measure for improving workplace safety and enhancing worker rights in Bangladesh now, which all at the conference claimed to be their unanimous goal. It would also provide assurance of a safer base line in the competition among countries elsewhere in Southeast Asia shifting competition to improved workplace competitive efficiency instead of that competition being based on who pays the lowest wages and who bribes the government officials the most to effectively to avoid enforcement of safety and workplace standards.

Those at the conference all professed unwavering dedication to the lot of the Bangladeshi workers. This might be a good place to start.